Arrest of Former Audi Executive Highlights VW Investigators’ Strategy – New York Times

Posted: Friday, July 07, 2017

Mr. Pamio was a relatively small player in what is alleged to be a conspiracy to dupe American regulators and consumers. But his arrest appears to be part of a strategy by federal investigators to pressure lower level employees to testify against their superiors.

“They want names, and they want top managers,” said Annette Voges, a Hamburg lawyer who represents Heinz-Jakob Neusser, a former head of engine development at Volkswagen who is also a suspect in the case.

The case by American authorities, filed in Detroit on Thursday, implies that Mr. Pamio acted under internal pressure and that he informed at least one senior manager about wrongdoing at Audi. The complaint could reinforce the widespread view that Volkswagen’s unforgiving corporate culture caused the scandal.

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Beginning in 2006, Mr. Pamio helped find a way to evade clean air standards in the United States after other departments at Audi refused to allocate enough room in the car for the necessary pollution equipment, according to the complaint. The space was needed in part for a high-end sound system, the complaint said.

In 2013, Mr. Pamio prepared a presentation for a member of Audi’s management board, who was not identified. The presentation, according to the complaint, described in detail how the engine software could be programmed to deceive regulators about a car’s emissions.

Terry Brennan, a Cleveland lawyer representing Mr. Pamio, declined to comment.

Andrea Grape, a spokeswoman for Munich prosecutors, confirmed Friday that a suspect was being held in connection with an investigation of Audi’s role in the cheating scandal. She did not identify the suspect in accordance with German privacy laws. A person close to Mr. Pamio confirmed widespread German media reports that he is the person being held.

Unlike the other executives charged in the scandal, Mr. Pamio, 60, worked primarily for Audi, a situation that could focus more attention on the brand.

Audi engineers were the first to figure out how to use software to cloak excess emissions, according to court documents. Volkswagen later adopted the technology to meet American limits on nitrogen oxides, which cause lung ailments and urban smog.

The luxury car division, which accounts for a disproportionately large share of the carmaker’s profits, has not suffered as much damage to its reputation as the Volkswagen brand. Audi said Friday that sales in the United States rose 6.2 percent in the first half of 2017 to 103,000 cars, a record.

Volkswagen pleaded guilty to United States charges in March and agreed to pay penalties and civil settlements of more than $22 billion. Despite the plea, the company has continued to insist that top management was unaware of the wrongdoing.


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Rupert Stadler, the chief executive of Audi since 2007, has clung to his job even though his office has been searched by investigators and despite criticism that he should take responsibility for wrongdoing that occurred on his watch. Audi declined to comment Friday.

Mr. Pamio was indicted after a lull in the case, a sign that investigators in the United States are continuing to pursue suspects. Little public activity had occurred in the Volkswagen investigation since the indictments of six other former managers were made public in January.

Until this week, only one other suspect was in custody in Germany or the United States. Oliver Schmidt, a German who previously handled Volkswagen’s relations with American regulators, was arrested in Miami in January and is being held in Michigan. He is accused of feeding false information to officials in an ultimately futile attempt to prevent them from discovering Volkswagen’s fraud.

Another former Volkswagen executive, James Liang, has pleaded guilty to charges including conspiracy to defraud the United States government and to violate the Clean Air Act. Mr. Liang, who worked at a Volkswagen testing center in Oxnard, Calif., is cooperating with investigators and is awaiting sentencing.

According to the complaint against Mr. Pamio, Audi resorted to cheating after it became clear that cars with 3-liter motors needed a larger tank to hold a chemical solution known as AdBlue that was used to scrub harmful nitrogen oxides from the exhaust.

That presented a quandary. A larger tank would rob space needed for the luxury sound system. But a smaller tank would require more frequent refills, an inconvenience that Audi feared would deter buyers. So the cars were designed to ration AdBlue — and pollute more than allowed — unless software in the car detected the telltale signs of an emissions test.

In 2008, Mr. Pamio appeared in a video in which he offered assurances that the AdBlue tank would need to be refilled only when the car was due for an oil change. “The refilling is planned at a minimum after 10,000 miles, during the oil change interval,” Mr. Pamio told the Driving the Nation website.

He was shown standing next to an Audi sedan with stenciling on the door that read, “The cleanest diesel in the world.”

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